What Is FINRA Arbitration?
A plain explanation of the forum where investors bring claims against brokerage firms and their advisors.
FINRA arbitration is a binding private process for resolving disputes between investors and brokerage firms or their registered representatives. A panel of neutral arbitrators hears evidence and issues a final written award.
It exists because most brokerage account agreements contain a predispute arbitration clause, which sends the dispute to arbitration instead of court. Industria Business Lawyers LLP represents investors in these proceedings nationwide. See FINRA Arbitration Attorneys.
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How FINRA Arbitration Works
Six questions cover most of what an investor needs to understand before deciding whether to bring a claim.
Why Disputes Go to Arbitration
Because brokerage account agreements contain predispute arbitration clauses, and the Supreme Court has held those clauses enforceable. In Shearson/American Express Inc. v. McMahon, 482 U.S. 220 (1987) the Court upheld arbitration of Securities Exchange Act claims between brokerage firms and their customers, and in Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989) it extended that to Securities Act claims, overruling the earlier rule of Wilko v. Swan, 346 U.S. 427 (1953).
Who Can Bring a Claim
A customer of a FINRA member firm with a dispute arising from the business activities of that firm or its associated persons. The Code of Arbitration Procedure for Customer Disputes governs which disputes belong in the forum.
Is the Outcome Binding
Yes. A FINRA award is final and binding, and judicial review is deliberately narrow. Under the Federal Arbitration Act as construed in Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008), courts confirm, vacate, or modify awards only on the statutory grounds. See FINRA arbitration awards.
Who Decides the Case
A panel of arbitrators drawn from FINRA’s roster, selected by the parties from lists FINRA provides. Panel size depends on the amount in dispute.
What Arbitration Cannot Do
Arbitration does not create rights that do not otherwise exist. The investor still has to prove a claim on the facts and the law. A losing investment is not, by itself, a claim.
How It Differs From Court
Arbitration is generally faster and less formal than litigation, discovery is narrower, there is no jury, and the award is not subject to ordinary appellate review.
When IBL Is Engaged
Investors typically reach out at one of these points.
Before filing. To assess whether the facts support a claim and against whom it should run.
After a firm’s internal complaint process stalls. Firms often handle complaints internally first, and that process has limits.
When a deadline is approaching. Eligibility limits and statutes of limitation both apply. See FINRA arbitration rules.
When another investor in the same product has already filed. Parallel claims can affect strategy and timing.
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Tell Us About Your Matter
What IBL Does in a FINRA Matter
Case Assessment +
The account, the product, and the paper trail reviewed before we advise whether a claim is worth bringing
Offering Document Analysis +
Offering and account documents read against what the investor was told at the point of sale
Statement of Claim +
The claim drafted to frame the facts, the causes of action, and the damages theory
Panel Selection +
The arbitrator list evaluated and strikes exercised with attention to background and prior awards
Discovery +
The firm’s supervisory records and product due-diligence files pursued under the FINRA Discovery Guide
Hearing Presentation +
The claim presented to the panel with documentary evidence and expert testimony where required
Award and Enforcement +
Confirmation, collection, and the limited post-award options addressed once the award issues
FAQ
01 • Securities Is FINRA arbitration the same as mediation?
No. Mediation is voluntary and non-binding, and a mediator helps the parties reach their own agreement. Arbitration is binding, and the panel decides the outcome. FINRA offers both.
02 • Securities Do I have to arbitrate, or can I go to court?
If the account agreement contains a predispute arbitration clause, arbitration is generally the forum. Courts have consistently enforced those clauses in the securities context.
03 • Securities Do I need a lawyer?
Representation is not required, but it is generally advisable. The proceeding follows formal procedures, and brokerage firms are represented by experienced defense counsel. General information is available from FINRA.
04 • Securities How much does it cost to file?
FINRA charges filing fees that scale with the amount in dispute, and there are hearing session fees. Current fee schedules are published by FINRA.
05 • Securities What happens if I win?
The panel issues a written award. Awards are binding and are ordinarily paid within a defined period. See what happens after an award.
Talk to a Securities Attorney
Describe what happened with your account, or call (202) 860-1210.
This page provides general legal information about FINRA arbitration and does not constitute legal advice or create an attorney-client relationship. Rules, procedures, and case law change. Information is current as of August 2026. Prior results do not guarantee a similar outcome.